Investors with an interest in Banks - Foreign stocks have likely encountered both Banco Santander-Chile (BSAC) and HDFC Bank (HDB). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Banco Santander-Chile and HDFC Bank are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that BSAC likely has seen a stronger improvement to its earnings outlook than HDB has recently. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

BSAC currently has a forward P/E ratio of 11.32, while HDB has a forward P/E of 21.93. We also note that BSAC has a PEG ratio of 1. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HDB currently has a PEG ratio of 1.70.

Another notable valuation metric for BSAC is its P/B ratio of 1.94. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HDB has a P/B of 2.87.

These are just a few of the metrics contributing to BSAC's Value grade of A and HDB's Value grade of D.

BSAC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BSAC is likely the superior value option right now.

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Banco Santander Chile (BSAC) : Free Stock Analysis Report

HDFC Bank Limited (HDB) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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